19.02.202211:20 Forex Analysis & Reviews: Bulls retreated from the market. Bitcoin collapsed on expectations of an escalation of the conflict in Eastern Europe.

The current week for bitcoin, as well as for the entire cryptocurrency market, turned out to be negative. In principle, this is not surprising. We have said more than once that the fundamental background for bitcoin remains extremely negative. The Fed makes it clear with each subsequent speech of its representative that it will start raising the key rate in March. Moreover, many experts believe that it can be increased immediately by 0.5%, and there will be 7 increases in total this year. This is a serious tightening of monetary policy and bitcoin's reaction will not be long in coming. In addition, this summer the Fed may begin unloading its balance sheet, which will mean the withdrawal of excess money from the American economy. Thus, there will be less money. And if bitcoin grew steadily on the increase in the money supply, now it will fall. Or at least will not be able to show a bullish trend this year. In addition, the issue of geopolitics has become acute in the last couple of weeks. The conflict in Eastern Europe has escalated to the limit. All Western media are trumpeting about the "offensive of the Russian Federation from day to day." The evacuation of residents has begun in the Donbas. Naturally, bitcoin, as the most risky instrument, began to lose ground on such news. Now the question is how much it will fall.

Technology no longer speaks in favor of bitcoin's growth.

In addition to the negative fundamental background, bitcoin has also lost technical support. Until recently, the cryptocurrency was trading above the ascending trend line on the 4-hour TF, but just yesterday it fell below this line. And at the same time below the important support level of $ 40,746. Thus, the short-term upward trend has been broken and now it is reasonable to assume that the decline will continue. The goal we have already called is the level of $ 31,100, which was never worked out during the last fall. In general, the price failed to overcome the level of $ 45,408 twice, and the whole movement of the last month now looks like a correction against a longer downward trend.

From our point of view, any deterioration of the geopolitical situation in Eastern Europe, in Ukraine, will put new pressure on the cryptocurrency market. Unfortunately, now the situation is such that there is "no smell of de-escalation." Moreover, the threat of military conflict is growing. Therefore, in the coming weeks, bitcoin and its "brothers" may react very painfully to any news coming from the "front". In favor of the new growth of the cryptocurrency, only the inflation that continues to grow can play now. Both in the EU countries and the UK and the USA. However, there is reason to assume that central banks will raise rates, which will lead to a slowdown in the consumer price index. Therefore, this year bitcoin may lose its status as an inflation hedging tool. In general, we are not seeing anything positive for the "bitcoin" right now.

The trend on the 4-hour timeframe has changed to a downward one. At this time, the price has fallen below the trend line, below the Ichimoku cloud, and below the $40,746 level. Thus, now the way is open to the level of $ 31,100, and we recommend selling cryptocurrency at this time. So far, there are no grounds to expect a recovery of the "bullish" trend. Absolutely all factors, technical, fundamental, geopolitical, speak in favor of the fact that the fall will continue.